tag:blogger.com,1999:blog-44556419876688831492023-06-20T08:46:23.175-04:00#FeedsWritesFrom a man previously engrossed in the private equity jungle and now in the rainforest that is the startup world, some thought pieces on news, deal flow, and general topics.PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.comBlogger39125tag:blogger.com,1999:blog-4455641987668883149.post-72407210854086772492014-01-02T11:33:00.004-05:002014-01-02T11:34:47.996-05:00Musings | Making the Pivot: What's Next for PE_Feeds in 2014<div dir="ltr" style="text-align: left;" trbidi="on">
<i>Hello everyone and happy new year to you all! I hope the end of 2013 finished with a bang and that 2014 is off to a good start.</i><br />
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I spent the last 6 months learning about the startup, brand, advertising, and VC worlds at <a href="http://gistdigital.com/" target="_blank">this agency</a>, and while 2014 is going to be an interesting year in all of those industries (as well as private equity), I decided to take another pivot onto #FeedsWrites and catalog everything I've been watching, reading, and sharing.<br />
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Thus, behold...<br />
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<b>THE NEW #FeedsWrites:</b><br />
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<ul style="text-align: left;">
<li><b><a href="http://bit.ly/JwoYDf" target="_blank">#Startup_Feeds</a>:</b> A constantly-updating Flipboard Magazine which will hold all articles, info, and insight I find about the venture capital, startups, brand, advertising, mobile, and tech worlds. </li>
<li><b><a href="http://bit.ly/Jwp39W" target="_blank">#PE_Feeds</a>:</b> Another constantly-updating Flipboard Magazine which will hold (and continue to hold) the most important pieces on private equity that I believe you should be reading.</li>
<li><a href="http://feedsreads.tumblr.com/" target="_blank"><b>#FeedsReads</b></a>: An experiment that started last year, it's a curation of interesting and/or thought-provoking articles broken down by approximate length. You also can submit pieces to it!</li>
<li><a href="http://about.me/pe_feeds" target="_blank"><b>Writing Catalog</b></a>: I've created and updated an About.me page that lists all of the pieces I have written as well as links to both Flipboard Magazines, #FeedsReads, and a few other surprises.</li>
<li><b><a href="http://thepereader.blogspot.com/2013/02/industry-thoughts-public-ifying-pe.html" target="_blank">What Will Continue</a></b>: I plan to put together more Leveraged Stories, Musings, Conference Notes, and Industry Thoughts along the way. </li>
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Expect some more surprises especially coming from the <a href="https://twitter.com/PE_Feeds" target="_blank">Twitter feed</a>. It's a new year and a new day (and a new dawn?) for PE_Feeds, and there's a lot of great work to be done ahead.</div>
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Feel free to leave me comments, and happy new year to all of you once again!</div>
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PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com3tag:blogger.com,1999:blog-4455641987668883149.post-83110322291603119322013-12-23T23:01:00.000-05:002013-12-23T23:01:48.048-05:00Musings | Thoughts on 2013, Private Equity, Startups, PE_Feeds, and the Future<div dir="ltr" style="text-align: left;" trbidi="on">
When you start a new chapter in your career, you don't ever expect it to fully engulf all aspects of your life. I left the private equity world as my primary gig to come into the tech and startups world, joining an award-winning team of mobile web and native app developers at <a href="http://www.gistdigital.com/" target="_blank">Gist Digital</a> with a CTO responsible for part of the software in the iPhone and a CEO who brought Salesforce.com and Webex to the entire Cisco Systems global network. Why did I move? Because it gave me an opportunity to move into a world that I had gotten a taste during my PE days:<br />
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The startup world.<br />
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I've always been fascinated by startups. <a href="http://learnwithhomer.com/" target="_blank">Some</a> are meant to truly help us and <a href="http://www.gotinder.com/" target="_blank">some</a>, well, have other purposes. That said, It's so impressive to me to see such talented minds collaborate on revolutionary products that they believe can change the ways we interact in our daily lives for certain aspects. One of my dream jobs was to run my own healthcare-focused investment firm dedicated to seed rounds for startups (hence the main move to pursue a Biomedical Engineering degree), but the more that I got involved with startups across various industries, I became more and more curious about the applications many apps and startups could be used for, well, mankind in general.<br />
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The past 5 months have been a wild ride in my frying-pan-into-fire transition from the world of PE (a world that took me quite a while to wrap my hands around) to the startup world (which I continue to enjoy learning more about). I've talked to agencies, labs, accelerators, incubators, VC firms, multi-startup founders (both seasoned and new), tech/startup/agency journalists, and the like to suck in as much information as I can. To make matters even more murky, private equity shops started investing in some of the more successful startups like RebelMouse and Refinery29 this year!<br />
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That last point is part of my 2013 Takeaway List of things I've seen in both PE and startups that have piqued my interest. I've also seen some interesting transitions among the PE_Feeds Twitter account, both great and rough:<br />
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<b>PRIVATE EQUITY:</b><br />
<ol style="text-align: left;">
<li><b>A Hopeful Deal Future.</b> This year was another big one for the world of add-on acquisitions for private equity firms. They heavily outweighed standalone deals and it's been pretty even in terms of secondary transactions (PE to PE) versus original transactions (acquiring the company from a strategic buyer, taking it private from public, or taking it from the family). Many companies will hit the 5-year holding period on 2015 and 2016 so we'll probably start seeing a winding down of add-on deals</li>
<li><b><b>IPOMG.</b><span style="font-weight: normal;"> It's also been a heck of a year for IPOs for private equity-backed companies. While it's usually been a limited IPO window in the past, 2013 seemed to be the year the window was propped up with a thin (but stable) branch to allow some of the most prominent and successful IPOs happen this year.</span></b></li>
<li><b>A Heavier Focus on Dividend Recaps, All Over.</b> Dividend recapitalizations (taking out a debt investment to pay the original private equity owners, and then their investors, a dividend) is not the most ethically sound instrument, its main purpose (to help keep a company for a long-term plan while keeping investors happy returns-wise) is still sound. With the aforementioned 5-year holding period not too far away, expect more dividend recaps done in 2014; I actually expect PE shops to hit a record on dividends raised. Am I proud of this? Absolutely not.</li>
<li><b>SEC Reg Tag. </b>The House of Representatives is working to stop private equity firms over $150MM in investments to be registered with the SEC. The original deadline for them to be registered was earlier this year so while it's an interesting push, it's honestly unnecessary for two reasons:</li>
<ol>
<li>While paperwork filing will be frustrating at first for PE shops (and the losers here really are lower middle market shops where internal budgets are tighter than most), it will be consistent enough. PE firms have internally policed themselves and others for decades so when a firm steps out of line, other PE shops will think twice about co-investing with them as well as potentially selling them companies they own.</li>
<li><b><span style="font-weight: normal;">From key pensions like the top funds in Canada to CalPERS and CalSTRS, Limited Partners (aka the key investors into private equity funds) took a heavier move towards both demanding for more information about investment processes and management fee charges as well as investing directly into companies. While some funds have some weird conflicts of interest (e.g., CPPIB's deal with KKR), expect this movement to continue. Canada's funds pay quite well so it's far from the end in terms of their direct investments. </span></b></li>
</ol>
<li><b>A Push to Help The Manufacturing Economy. </b>While we see a heavy focus towards the USA becoming more of a service-focused economy, there are still gleams of hope that our manufacturing prowess will return. Many industrial-focused companies are backed by private equity firms and it will continue to grow, so I truly believe that private equity has a moral obligation to help kickstart the US's manufacturing strengths. It's obviously a positive PR move for the industry, but the ethics need to outweigh it. </li>
<li><b>General Solicitation = Meh. </b>The ban on general solicitation for private equity firms was lifted this year and while it's a powerful moment, it's not going to matter...on a public basis. There has been one hedge fund so far that has openly advertised but one point that I have consistently made about this lifted ban is that the SEC should focus on a consistent template that PE shops could use as their prospectus. You'll definitely see an under-the-radar movement towards private banking individuals and high-net-worth clients and what would be interesting to see is if family offices would get move into the movement as investors.</li>
</ol>
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<b>STARTUPS:</b></div>
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<ol style="text-align: left;">
<li><b>Creativity Has No Bounds.</b> Everybody hears about the Facebooks, Twitter, Tinders, Snapchats, and the like. That said, after going through countless Meetups, tech demos, and pitches, it is so comforting to me to hear some creative and innovative pitches from ambitious men and women. </li>
<li><b>Helping Others:</b> The financial services industry has been a notoriously cold and tough world. While social media and branded content has helped the industry create a more human touch, coming to a more friendly, open environment in the startup world where aspiring entrepreneurs helped and continue to help each other in providing advice, resources, and information was quite an eye-opening experience for me. It's quite wonderful especially when you see people from all walks of life entering the startup world with big dreams and bright ideas.</li>
<li><b>Tech Journalists and Valleywag.</b> Making the transition to the startup/Silicon Valley world from private equity, you move from one journalist and coverage base to another, and it's been an interesting change. PE journalists and tech journalists are extremely different, and while I've integrated my reading from publications like AllThingsD, Techcrunch, and Mashable to MediaPost, Digiday, AdWeek, and AdAge, one publication that really pointed out to me is Gawker Media's online platform known as Valleywag. Run by Sam Biddle and Nitasha Tiku, it's a variance of dives into the ethics issues of Silicon Valley and the startup world. Sam has focused on the general news and ethics violations while Nitasha has done more deep dives and takedowns that are fantastic reads. I've visited the site so much that it's becoming a solid bookmark in my browser and I openly wonder what would happen if/when there would be a Valleywag-style site for private equity. </li>
</ol>
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<b>TWITTER AND PE_FEEDS:</b></div>
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<ol style="text-align: left;">
<li><b>Ethics and Social Media.</b> There have been many publications online like BuzzFeed that have touched on ethically wrong posts on social media. The most prominent example of this is when the world learned about ex-IAC PR exec <a href="http://www.buzzfeed.com/alisonvingiano/this-is-how-a-womans-offensive-tweet-became-the-worlds-top-s" style="background-color: white;" target="_blank">Justine Sacco</a>. Whatever your position on her tweet, it was by far ethically wrong and disturbing. That said, it was equally disturbing to see some of the terrible and shocking responses that the general public wrote in light of her. From this to anonymous commenters on forums, when one is given more power to wield their thoughts from semi-protective curtains, it is scary on how far people will go to say hurtful things. Remember when many of our parents told us that if we don't have anything nice to say, don't say it? It seems that that sage advice has been thrown off the top of the Empire State Building. (We're all culpable for this terrible mistake, including myself.) </li>
<li><b>Reflections. </b>It's been a great year in the world of PE_Feeds; I've met some very interesting people and have had the pleasure of some wonderfully talented and influential men and women follow me. That said, every single person who follows PE_Feeds is very special to me. What started as an experiment in 2010 has grown into something big that I never thought could happen. That said, it's been a rough time this year as I feel I lost the trust of several people who did help me get to where I was. I pissed off <a href="https://twitter.com/kevinroose" target="_blank">two</a> important <a href="https://twitter.com/katierosman" target="_blank">people</a> to me who were great influences on PE_Feeds due to the mess behind Freedom Group (the gunmaker). I've also pissed off a few people due to some of my actions. I take these things very seriously and it's honestly tough to live with them. As Michael Richards said to Jerry Seinfeld when the topic of his nightclub mess came up, it broke me. When you build up a platform and you try to stay as professional and informational as possible, you want to take your mistakes seriously and to those who I have offended, I am truly sorry.</li>
</ol>
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I know I've missed a lot of specific points; it's been tough to focus on both the private equity and startup worlds this year since they're two different places. That said, it has been a blast to listen to various people pitch great ideas to me and while I will continue to find ways to help them on a development standpoint, it would be great to help them further on an investment standpoint and take their ideas to the next level. </div>
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Here's to 2014, everyone.</div>
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PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0tag:blogger.com,1999:blog-4455641987668883149.post-82128836958598448762013-05-24T19:00:00.000-04:002013-05-24T19:00:09.956-04:00Musings | The Future<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: inherit;">It's been a rough, long, deal-laden week, especially in my world of private equity. But I just wanted to take a few paragraphs to put down why I started all of this, why I started actually COVERING an industry which still the general public has had difficulty understanding. It is not their fault; it is the fault of all of us in the industry of not bridging the gap between the companies we deal with on a daily basis and the firms that own or owned them.</span></div>
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<span style="font-family: inherit;">Yes, private equity journalists are dedicated to the insight, the numbers, the details. I have many friends within this area and I will continue to, because I respect and admire their work. But in June 2010, I took the task of trying to make it a little easier for the public to understand WHY private equity should matter to us. It was (and is) an unbiased way of following the money, pulling back the curtain to an industry that is still so archaic that it will take an NVCA-sized mountain to move it.</span></div>
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<span style="font-family: inherit;">That said, I've been told to "shut up and drink my beer." I've been told nobody cares about this. I've even been told there are bigger people than me in the subject that people will listen to. And yet, those "people" who others refer to actually follow, respect, and support me. Dan Primack, arguably the most prominent in our business, showed his care and support at an event to me. It was one of the most powerful things to receive in my career. To get support from the othodox (Dan, PEHub, The Deal, DealBook, The WSJ, AltAssets, etc.) to the unorthodox (Michael Dell, Jim Breyer, Pat Kiernan) in terms of my industry coverage and attempts to try and explain such a complex industry to those who relate it to Mitt Romney, "vulture capitalism," and an evil genre in general. </span></div>
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<span style="font-family: inherit;">I've been in this industry for 5 years. I've seen private equity firms figuratively and literally tear companies to the ground and I've seen other firms rescue companies that we love from the dead. I've worked on projects where a colleague at a private equity-backed company would be gone the next week. I will continue to cover this industry, because even some of the most powerful people in it <b>TOLD ME</b> to keep doing what I'm doing.</span></div>
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<span style="font-family: inherit;">I'll go back to my scotch and the new Daft Punk album now as I see my <a href="http://amblex.com/" target="_blank">future</a>, but I will leave you all with this quote from a great man who we all should learn from:</span></div>
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<span style="font-family: inherit;"><span style="background-color: white; color: #333333; line-height: 14px;"><i>"Brick walls are there for a reason: they let us prove how badly we want things."</i></span></span></div>
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<span style="font-family: inherit;"><span style="background-color: white; color: #333333; line-height: 14px;"><i><br /></i></span></span></div>
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<span style="background-color: white; color: #333333; line-height: 14px;"><span style="font-family: inherit;"><i>- Randy Pausch</i></span></span><br />
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PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com1tag:blogger.com,1999:blog-4455641987668883149.post-34918160827478460382013-03-30T11:32:00.001-04:002013-03-30T11:45:16.179-04:00Musings | School Shootings and the Gun Debate: How the Issue Is Deeper
Than "Mentally Ill"This morning I read a powerful piece in the NYT Magazine about Jay Caspian Kang's conversation with One L. Goh, who killed 6 people and wounded 3 others in Oakland on 4/2/12 before surrendering to the police. It's a very telling and scary story, not just because of the recounting I the gruesome events, but because of Goh's background. <br />
While the story focuses on being Korean in America, it raises a deeper issue, an issue that has unfortunately become more trivial during this whole gun debate: what it means to be "mentally ill."<br />
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There is no question that there are many mentally unstable men, women, and children who need to be helped and are in need of support. But what is more worrisome is how both the NRA's Wayne LaPierre and the media are treating these unfortunate souls as a category. It goes deeper than that because there are countless people like Goh who are relatively mentally healthy people who are dealing with so many issues and are quietly crying out for help. <br />
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The worst part is, these men and women are unable to find the necessary support systems, whether it's because they don't know where to turn or they are scared that turning to help is a symbol of weakness. In a society where sensationalism, peer pressure, and a desire to fit in has overtaken daily life, any sign of weakness is trampled. <br />
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We all have a duty to keep our eyes open. We all have a duty as human beings to see if people we know (and even those we don't) are struggling. We have a duty to show them they won't be judged by working towards finding ways to become happy again. <br />
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We can't put them in a category. It only makes it worse. PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0tag:blogger.com,1999:blog-4455641987668883149.post-37657287853659978252013-03-06T11:41:00.001-05:002013-03-06T12:10:36.260-05:00#FeedsReads | What I'm Reading (Part I)<div dir="ltr" style="text-align: left;" trbidi="on">
From time to time on the Twitter account, I'll tweet out some articles or pieces I'm reading regardless of their relation to private equity. I started tagging those tweets with the hashtag "#<a href="https://twitter.com/search?q=%23FeedsReads&src=typd" target="_blank">FeedsReads</a>." Since we have this blog going, I'll share with you a post every now and then with about 5 or so articles I think you all would enjoy reading.<br />
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So, here they are: The first edition of the #FeedsReads posts!<br />
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<ol style="text-align: left;">
<li><a href="http://www.nytimes.com/2013/03/03/nyregion/40-years-after-an-acid-attack-a-life-well-lived.html" target="_blank">NEW YORK TIMES</a>: A heartbreaking story of Josh Miele, whose face was damaged by acid as a child but rose up to the happiest ending one could have.</li>
<li><a href="http://www.conservationmagazine.org/2011/06/to-build-a-better-fire/" target="_blank">CONSERVATION MAGAZINE</a>: How stovemakers are trying to build the perfect wooden stove to help Third World countries and to combat climate change.</li>
<li><a href="http://www.salon.com/2013/03/04/jake_the_snake_roberts_i_started_drinking_when_i_was_11_partner/" target="_blank">SALON</a>: WWE legend Jake "The Snake" Roberts, his recovery from addiction, and his comeback to the ring. </li>
<li><a href="http://www.washingtonpost.com/sf/sports/wp/2013/02/27/cyclings-road-forward/" target="_blank">THE WASHINGTON POST</a>: How cycling phenom Joe Dombrowski is leading the way towards cycling's future, marred in the scandal that is Lance Armstrong.</li>
<li><a href="http://qz.com/57254/to-save-the-world-dont-get-a-job-at-a-charity-go-work-on-wall-street/" target="_blank">QUARTZ</a>: How ethicist William MacAskill believes working on Wall Street in your initial career will do more good (because you'll make more money to be able to fund good-doing).</li>
<li><a href="http://www.theatlantic.com/entertainment/archive/2013/03/still-abiding-after-15-years-the-laid-back-world-of-big-lebowski-worship/273750/" target="_blank">THE ATLANTIC</a>: Ashley Fetters on the 15-year anniversary of the cult classic <i>The Big Lebowski</i> and how its laid-back world still abides, dude.</li>
<li><a href="http://www.theatlantic.com/magazine/archive/2013/03/how-to-stop-bullies/309217/?single_page=true&src=longreads" target="_blank">THE ATLANTIC</a>: A powerful piece (and the source for my cyber-bullying trolling post) about the modern age of combating cyber-bullying. </li>
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Let me know what you guys think of the pieces in the Comments section. </div>
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- PE Feeds</div>
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PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0tag:blogger.com,1999:blog-4455641987668883149.post-65179635357864130612013-03-01T19:34:00.001-05:002013-12-23T18:45:04.662-05:00Musings | The Sickness That Is Trolling: How Jabs To One Are Slaps To Others<div dir="ltr" style="text-align: left;" trbidi="on">
I'll just go ahead and say it: I was bullied a few times when I was younger. <br />
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I was poked at for my scrawny size, my inferiority complex, and worst of all, for my religion. Growing up in a mostly-white suburb, there was one day when our world history classes taught us about it (Jainism) and my fellow classmates subsequently learned that I was Jain. While I was proud that they were learning about the history of Jainism, many of the guys instead thought it would be funny to call me "Diaper Boy" as their way of understanding some of the tenets of the Jainism. With sentences like "So what, you don't kick rocks?" and "Why aren't you wearing your diaper today?" coming up, it hurt. Hard. I somehow was able to laugh it off then, but it still scars me to this day of the ignorance of those guys. <br />
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In this day in age, the worst kind of bullying is coming up on social media. I've been going through this <a href="http://www.theatlantic.com/magazine/archive/2013/03/how-to-stop-bullies/309217/?single_page=true&src=longreads" target="_blank">Atlantic piece</a> about the modern ways we are tackling cyber bullying, and what scares me the most is that even as people I know get older, their ignorance and sense of self-ethics never changes. <br />
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"Trolling," a quasi-bullying tactic I have been seeing way too often on Twitter, is getting a bit out of hand these days. From "subtweets" (tweets specifically referring to someone or a set of people without directly mentioning them) to direct attacks, I see so many snarky comments and jabs that while the jabber may think is funny and lighthearted, the jabbed may take it more as a heavy backhanded slap. It's not right and it makes that person look more of a fool than he or she already is. <br />
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What is even scarier to me is that some of these jabbers are well-respected people within their fields of work. I have seen journalists unfairly blow up on others (including myself). I have seen social media strategists/editors/directors/etc use some pointed language to take down the viewpoints of people, even if they are just expressing their opinions. I've even seen publications retweet tweets of others because they did a simple search on Twitter in order to publicly shame them. Really? Are we adults or are we still children?<br />
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I know it is unfair to point fingers like I am above, but what is scarier to me is who is to blame: all of us. Let's face it, we all have laughed at one of these actions. We all have seen them happen. But we don't ever do enough to stop it or even police it. I am at fault, and so are many of us.<br />
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The song from Avenue Q is sadly correct: Everyone's a little bit racist. But as grown adults, we have the ability to both stop ourselves from causing these disturbing jabs and to put a stop to others doing it by calling them out. The Atlantic's piece points on how the idea of a "self-reflection" box could come up before one posts anything due to algorithms, and that's a great and hopeful step. But if we cannot control ourselves from doling out these backhanded insults, then we all need a lesson in maturity. <br />
We have seen individuals take action themselves. John Herrman took down ComfortablySmug, and Ryan Broderick has taken on some seriously scary 4Chan posters during the "Cutting4Bieber" mess. It takes balls to take action, and they both did great work. Guys, if you're reading this, thank you.<br />
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All I ask of each and every one of you (and even myself) is this: before you post, write, tweet, or say anything, take the extra few seconds and think: could this hurt someone? If it does, then hold back. Your psyche will thank you later. <br />
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PS: Also, if you've never visited it before, check out PostSecret. You will find some of the most powerful inner thoughts of people around you, and sometimes you'll even feel you'll connect with them.</div>
PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0tag:blogger.com,1999:blog-4455641987668883149.post-36913619016626057712013-02-27T09:05:00.002-05:002013-02-27T13:41:20.840-05:00Industry Thoughts | Private Equity's "Doughnut Hole" Is More Like A Steak Bait<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: inherit;">Yesterday afternoon, Fortune's Dan Primack put together a <a href="http://finance.fortune.cnn.com/2013/02/26/private-equity-doughnut-hol/" target="_blank">piece</a> on some of his observations during the SuperReturn International Conference in Berlin. It was an understandable tongue-lashing at the industry on how private equity investors and execs truly believe the leveraged prices are too high and yet are not calling for a pull back. Dan's line at the end sums up his piece perfectly:</span><br />
<span style="font-family: inherit;"><br /></span>
<span style="background-color: white; color: #333333; line-height: 19px;"><i><span style="font-family: inherit;">To be clear, I'm not arguing that we're about to have another rash of TXU's on our hands. But that's due more to capital constraints than it is to changed attitudes or behaviors. What I am saying is that private equity investors are aware of a disconnect between their head and their heart. And they don't plan to do anything about it.</span></i></span><br />
<span style="background-color: white; color: #333333; line-height: 19px;"><i><span style="font-family: inherit;"><br /></span></i></span>
<span style="color: #333333; font-family: inherit;"><span style="line-height: 19px;">Dan is right in that PE execs are not openly calling for a pullback. This IS SuperReturn after all, where it's one of the major PE conferences designed to feature key speakers. Whether the Q&A session was more strict on getting answers or not is something to be seen, but we will have to rely on Dan's and Cristina Alesci (who Dan saw grabbing an <a href="https://twitter.com/danprimack/status/306460749784547328" target="_blank">interview</a> right before he did - early BloomBird gets the worm, I guess) for the deep interviews at this point.</span></span><br />
<span style="color: #333333; font-family: inherit;"><span style="line-height: 19px;">(UPDATE: Cristina <a href="https://twitter.com/CristinaAlesci/status/306833178394517505" target="_blank">responded</a> to Dan's tweet in the most perfect way.)</span></span><br />
<span style="color: #333333; font-family: inherit;"><span style="line-height: 19px;"><br /></span></span>
<span style="color: #333333; font-family: inherit;"><span style="line-height: 19px;">While these execs aren't openly calling for the pullback, they are DEFINITELY saying it in private. In my many talks over the past few weeks with middle market, mega-size, and lower-market PE shops, many execs have told me that they are finally seeing deals pick up (everyone was in a rush to close deals at the end of December because of tax reasons) but the cheap debt is making everyone think twice. </span></span><br />
<span style="color: #333333; font-family: inherit;"><span style="line-height: 19px;"><br /></span></span>
<span style="color: #333333; font-family: inherit;"><span style="line-height: 19px;">This is why I compare the doughnut analogy that Dan used to more like a "steak bait." </span></span><br />
<span style="color: #333333; font-family: inherit;"><span style="line-height: 19px;">(DISCLAIMER: I was hungry when I came up with this analogy.)</span></span><br />
<span style="color: #333333; font-family: inherit;"><span style="line-height: 19px;"><br /></span></span>
<span style="color: #333333; font-family: inherit;"><span style="line-height: 19px;">Private equity's investors (limited partners) have the upper hand again in this day in age of the private equity industry, and while there is cheap debt and financing out there, the equity dollars are still seriously crushed by the terms, conditions, and extra debt being loaned by the banks. It's like the banks drop out a big juicy Peter Luger porterhouse steak with a very strong hook and fishing line attached to it. You grab it, be prepared for a rough ride. As Dan put it in his post...</span></span><br />
<span style="color: #333333; font-family: inherit;"><span style="line-height: 19px;"><br /></span></span>
<span style="background-color: white; color: #333333; line-height: 19px;"><i><span style="font-family: inherit;">As one senior PE investor explained it to me: "You might get excited that someone is willing to put $1 billion of debt next to your single dollar, but remember that your bill is now sitting beneath one billion or them."</span></i></span><br />
<span style="color: #333333; font-family: inherit;"><span style="line-height: 19px;"><br /></span></span>
<span style="color: #333333; font-family: inherit;"><span style="line-height: 19px;">There is a heavy sense of trepidation among PE firms I've talked with in terms of deals with all the available financing out there; that is why you'll see much more structured, smart deals that will come out within at least the next 2 quarters. I will say this though: if I'm wrong, I'll go eat a paper steak, Dan.</span></span><br />
<span style="color: #333333; font-family: inherit;"><span style="line-height: 19px;"><br /></span></span>
<span style="color: #333333; font-family: inherit;"><span style="line-height: 19px;">- PE Feeds</span></span></div>
PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0tag:blogger.com,1999:blog-4455641987668883149.post-54253976520729807602013-02-26T11:11:00.000-05:002013-02-26T11:11:03.666-05:00Leveraged Stories | TSG Consumer Partners and Stumptown Coffee Roasters<div dir="ltr" style="text-align: left;" trbidi="on">
<div style="text-align: left;">
<span style="font-family: inherit;">Here's a nice and short private equity story: TSG Consumer Partners, one of the most well-respected consumer-focused PE firms (they helped grow companies like Vitaminwater and Smart Balance and currently own pretty well-known companies like Rebecca Minkoff, Pop Chips, Muscle Milk/Cytosport, and e.l.f. Cosmetics), bought a majority stake in Portland-based gourmet coffee company Stumptown Coffee Roasters back in May/June 2011 (announcement/closing). </span></div>
<div style="text-align: left;">
<span style="font-family: inherit;">TSG was actually looking to expand within the gourmet coffee area, and from my talks with people in the firm, they've been looking at many specialty consumer sectors to work on.</span></div>
<div style="text-align: left;">
<span style="font-family: inherit;"><br /></span></div>
<div style="text-align: left;">
<span style="font-family: inherit;">It was reported in the <a href="http://www.nytimes.com/2011/06/08/dining/for-stumptown-espresso-might-be-big-business.html?_r=0">New York Times</a> that TSG had picked up a 90% stake in Stumptown with the "goal" of selling it to a larger company down the road. Now, knowing how the firm works, they would only sell to a larger company if the brand reputation their portfolio company (Stumptown in this case) was kept solid and not destroyed. </span></div>
<div style="text-align: left;">
<span style="font-family: inherit;">(Also, I'm not surprised La Colombe Torrefaction, one of Stumptown's competitors, said this, as its founder Todd Carmichael wrote a <a href="http://www.esquire.com/blogs/food-for-men/stumptown-sold-out-5839692">scathing piece</a> in Esquire's "Eat Like a Man" blog in May 2011, basically saying Stumptown sold out "to Wall Street." Stumptown's founder Duane Sorenson wrote a <a href="http://stumptowncoffee.com/a-note-from-duane/">note</a> shortly afterwards on the company website, and even TSG's head Alex Panos <a href="http://dinersjournal.blogs.nytimes.com/2011/06/02/stumptown-expands-with-the-help-of-a-powerful-investor/">said</a> that Duane is still calling the shots.)</span></div>
<div style="text-align: left;">
<span style="font-family: inherit;"><br /></span></div>
<div style="text-align: left;">
<span style="font-family: inherit;">However, it is definitely worth nothing TSG has done many short-term deals in the past with the goal of helping the companies it owns build its brand. <a href="http://www.bizjournals.com/portland/print-edition/2011/06/10/tsg-aims-to-grow-stumptown-might-sell.html?page=all">The Portland Business Journal</a> looked at the 2003 acquisition of Harry's Fresh Foods for example. The same article also mentioned that (and this is true) TSG execs even walk along <b>store aisles</b> for investment opportunities!</span></div>
<div style="text-align: left;">
<span style="font-family: inherit;"><br /></span></div>
<div style="text-align: left;">
<span style="font-family: inherit;">That same NYT article had mentioned that TSG talked with California-based coffee company Blue Bottle Coffee:</span></div>
<div style="text-align: left;">
<span style="font-family: inherit;"><br /></span></div>
<div style="background-color: white; line-height: 1.467em; margin-bottom: 1em; text-align: left;">
<i><span style="font-family: inherit;">“If you want to grow your business you have to do it somehow, and if you can’t get a loan, you have to sell equity, unless you have a really, really well-off grandpa,” said James Freeman, the owner of <a href="http://www.bluebottlecoffee.net/" style="color: #666699;" title="Blue Bottle Coffee">Blue Bottle Coffee</a> in Oakland, Calif. He said he’d met with two representatives from TSG in March, but would not say what they discussed.</span></i></div>
<div style="background-color: white; line-height: 1.467em; margin-bottom: 1em; text-align: left;">
<span style="font-family: inherit;">The bigger story about TSG's acquisition is its plan for selective expansion. They opened two new shows in Brooklyn and added a bottling facility to expand the production of its cold brew coffee. </span></div>
<div style="background-color: white; line-height: 1.467em; margin-bottom: 1em; text-align: left;">
<span style="font-family: inherit;">Finally, Willamette Week put together a really good <a href="http://www.wweek.com/portland/article-17590-the_selling_of_stumptown.html">breakdown</a> of TSG's desire to go into gourmet coffee. The quote on the social media "backlash" is pretty funny:</span><br />
<br />
<div class="p2" style="line-height: 22px;">
<span style="font-family: inherit;"><i><span style="color: #333333;">The Internet was rife with conjecture: Stumptown was looking to break into Europe. Stumptown was broke. Stumptown had been bought by McDonald’s. “Did Stumptown just get sold to Vitamin Water? Maybe it’s time to switch to Clive [a small Portland roaster],” Decemberists frontman Colin Meloy </span><a href="http://twitter.com/#%21/colinmeloy/status/75673861127020544" style="outline: none; text-decoration: initial;" target="_blank"><span style="color: #073763;">tweeted</span></a><span style="color: #333333;">.</span></i></span></div>
<div class="p2" style="line-height: 22px;">
<span style="font-family: inherit;"><i><span style="color: #333333;"><br /></span></i></span></div>
<div class="p2" style="line-height: 22px;">
<span style="color: #333333;">So far, it looks like TSG is doing well with Stumptown. Sorenson is still running the show, and they're looking to expand into the right cities. A handful of PE firms are as successful as TSG in building up brands, and that will be one of the key futures of private equity.</span></div>
</div>
</div>
PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0tag:blogger.com,1999:blog-4455641987668883149.post-36428110577892100902013-02-23T19:14:00.001-05:002013-02-25T09:32:11.489-05:00Industry Thoughts | Public-ifying PE (an update)<div dir="ltr" style="text-align: left;" trbidi="on">
Yes, it's been a while since this blog has been updated. I greatly apologize for this, but please know it was not on purpose. I've been spending a lot of time utilizing Twitter to write my thoughts (albeit to the 140 character limit), and I know my feed has been a bit off topic recently. So I thought I'd do a little update and share what is going to happen on this blog moving forward. <br />
<br />
LEVERAGED STORIES<br />
While the Private Equity Growth Capital Council and ACG have been been doing good jobs on sharing some stories about private equity success stories, I am going to write about some others I've been seeing, both on the success and failure sides. The bigger story I will aim to tell is more like a forensics report, digging as deep as I can to show what went right (or wrong). More importantly, it will focus on companies people will recognize well (from Dave & Buster's to the makers of the Slinky toy), with the goal of showing how much work behind the curtain PE is doing. The curtain is slowly getting pulled back by various people. I intend to rip it down. <br />
<br />
REGULATION<br />
From the SEC registration to public enforcement, private equity will be under a larger magnifying glass moving forward. I plan to keep track of what happens and keep you guys and gals updated. While it's more paperwork for PE firms (and the majority of firms work within the law), it's better for its public image as it continues to be a work in progress. <br />
<br />
BETCHA DIDN'T KNOW...<br />
Along with telling some PE success and failure stories, I'll pen a short post or two about a company that's well known among the general public that's, well, PE-backed. From Rebecca Minkoff to Rosa Mexicano, you never know what company I'll touch next. <br />
<br />
CONFERENCE NOTES<br />
While I'll definitely be tweeting during the many PE conferences I attend, expect some takeaway posts at the end of them. Intergrowth 2013 (the largest private equity conference in the world) is coming up in April, so expect some posts then. <br />
<br />
INDUSTRY & ARTICLE THOUGHTS<br />
I read and see a lot of private equity pieces. I'll share some of what I'm reading and give my take and/or responses to them. It could be data-centered or insight-centered. Heck, I'll throw in a snarky piece every now and then. Those will be fun. <br />
<br />
MUSINGS<br />
Every now and then you'll see a non-private equity piece here. It may center around something fun (sports, animals, WWE - yes, it's my guilty pleasure) or something thought-provoking (personal thoughts, ideas, etc.). I promise they'll be worth the read.<br />
<br />
Team PE Feeds has garnered a bigger following than I ever would have imagined. I cannot thank you all enough and plan to up my game and share with you a deeper insight about PE to those who may have never been able to understand it. <br />
There are many great private equity journalists dedicated to the data and insight, but nobody has consistently helped educate the public, which is totally fine. Many of them (Jason Kelly with his book The New Tycoons, for example) have done great jobs when they have. But their jobs can't allow them to do it full time. <br />
That's where I come in. <br />
<br />
Enjoy the leveraged ride. <br />
<br />
- PE Feeds<br />
<br /></div>
PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0tag:blogger.com,1999:blog-4455641987668883149.post-67412220527730850842012-04-30T20:24:00.003-04:002012-04-30T20:24:24.086-04:00Industry Thoughts | One-ish Year Update<i>July 2011. Yikes. That was the last time I wrote in here. First off, sorry guys for the lack in posts. Right when I had promised a return to consistency, work gets crazy and the PE industry gets gut check after gut check by the media, Democrats, and the general public. </i><br />
<i>But let's take a look at some key stories that happened the past 3 quarters...</i><br />
<br />
<b>THE ANTI-PE GUT CHECKS:</b> From one <a href="http://www.globalpost.com/dispatches/globalpost-blogs/macro/mitt-romney-jon-stewart-bain-capital">jab</a> to another <a href="http://www.newyorker.com/reporting/2012/02/06/120206fa_fact_frazier">hook</a>, the industry faced an ONSLAUGHT of acrimonious words from the mainstream media and American public, getting terms like "vulture capitalists," "job killers," and executives that are basically, to put it bluntly, fornicating acquired companies to cut costs, "strip and flip" them, and sell at a profit, leaving the workers to fend for themselves. Hmmm, how wrong is this picture here? Maybe Dan Primack's "wicked smaht" <a href="http://finance.fortune.cnn.com/2012/02/08/obama-will-keep-hurting-private-equity/">friend</a> can show you. <br />
So, what's been the response to the gut checks: the PEGCC released a site, <a href="http://www.privateequityatwork.com/">Private Equity At Work</a>, that touches the postive effects that larger PE firms have been making. Moreover, ACG had two sides, the Middle <a href="http://www.middlemarketgrowth.org/">Market Private Capital Leadership Forum</a> and a recently released PE <a href="http://www.growtheconomy.org/">education piece</a> focused on the middle market (which is really becoming PE's future). You also had many journalists attempting to educate their readers about private equity, how it works, and the pros and cons of it.<br />
That's great and all, but the problem here is that we can get countless economists, execs, and portfolio company workers to provide useful information to educate, but it takes 1 Jon Stewart segment, or 1 "debate" on <a href="http://www.pbs.org/newshour/bb/business/jan-june12/privateequity_01-18.html">NewsHour</a> (where the journalist who will not be named here basically tries to take over the program), or 1 angry anti-PE tirade to turn the public (which, by the way, is in a phase of "Generation Pissed Off" and would be happy to find a way to skewer the financial services industry) more towards anti-PE.<br />
It won't matter about the Stewart Weitzmans they're buying, the Huddle Houses they're eating at, or the countless industrial companies that provide things from power to 3D technology through Real3D, the anti-PE battle will continue on until one prominent and influential source can step up and explain what the industry is REALLY doing.<br />
We need less Josh Kosmans and more David Snows.<br />
<br />
<b>PERFORMANCE IS KING:</b> From strategic buyers still remaining a constant threat to higher multiples along with LPs clamping down on terms and conditions, the future of PE (the mid- and lower-mid-markets) is working to stay innovative on deal flow and operational improvements. Why? Because they need to show the pure performance off to their investors.<br />
LPs are pushing PE to hire more Operating Partners (or people who understand operations and strategy improvements more, the <a href="http://www.lek.com/">LEKs</a>, <a href="http://www.gcpny.com/">Gotham Consulting Partners</a>, <a href="http://www.parthenon.com/">Parthenons</a>, and 3rd party firms of the land) to handle day-to-day operations. PE is also taking a personal initiative to be more conservative and smart in their investments. Moreover, with the middle market and lower middle market divisions making more deals (Pitchbook determined that 3 out of 5 deals in the past decade were middle market-focused), we should still continue to see more careful deal flow coming out of the industry (albeit with higher multiples thanks to some overpaying that no doubt will happen from firms flush with cash/dry powder and a need to use it soon before terms run out).<br />
Then we have survival of the fittest. Time is running out for many firms to use up capital and deliver strong IRRs. While some firms are able to snap up capital for new funds in a matter of weeks (some even getting it within 10 weeks!), others will struggle and get tens or hundreds of millions of dollars lower than what they expect. Does this stink? Of course it does, especially as LPs apparently have $1/4 trillion to spend on PE but hold it back.<br />
When the future of PE is securely mid-market, expect the faucets to open up again. We're partly seeing that right now.<br />
<br />
<b>OPTIMISM:</b> I don't think I've seen any other industry within financial services that has more optimistic dealmakers than PE. I recently returned from <a href="http://www.acg.org/global/intergrowth2012.aspx">ACG InterGrowth 2012</a> and caught up with a lot of my colleagues in the industry. The two big things I got from everyone were:<br />
<br />
<ul>
<li>We are BUSY with deals and books to read through, and</li>
<li>We may not be as busy as we like, but things are really starting to pick up.</li>
</ul>
<br />
Even with the doom and gloom of media pieces being put out there, PE is looking up and towards the sky. Heck, even PE is <a href="http://finance.fortune.cnn.com/2012/04/30/private-equity-were-hiring/">hiring again</a>!<br />
<br />
I am not worried about the industry moving forward into the election this November, even with the gut checks here and there. Besides, one happy middle market PE firm that I know quite well, Monomoy Capital Partners, is getting some <a href="http://www.businessweek.com/printer/articles/22306-my-week-at-private-equity-boot-camp">fun</a> <a href="http://www.businessweek.com/articles/2012-04-30/what-the-political-world-should-know-about-private-equity">time</a> in the press, though Bloomberg Businessweek almost made the entire a boneheaded decision with its choice of <a href="https://twitter.com/#!/MikeDuda/status/197058298040692736/photo/1">cover</a>. (Really, guys??) What BB is not hammering on though is that WHAT THEY ARE DOING IS NOT AN OUTLIER. Where is Jay Jordan, Riverside's Pam Hendrickson, or heck even CARLYLE when you need them for backup?<br />
<br />
You also have to remember that Obama has been pushing the Small Business Investment Company (SBIC) program, also trying to make the head a Cabinet position, and lots of mid-market firms are <a href="http://thepereader.blogspot.com/2010/11/industry-thoughts-sbic-move.html">applying for funds</a> within it with the focus to help small businesses. That also explains the subdued attack by the Obama campaign on PE; their target isn't the industry, it's Bain Capital. (Also, you can't forget Obama's strong relationships to key PE execs, one publicized one being Blackstone's Tony James.)<br />
<br />
I briefly touched three key drivers of PE's evolution through the past 12-ish months. I also have that optimism shared among execs, as the industry gets more out in the open through SEC registrations, the JOBS Act, and a growing desire among GPs to share information about funds to investors and even the public. Private equity is coming out of its off-the-radar style and slowly rolling out into the sun. When it finally becomes entirely exposed for all to see, we all will know how actually useful and beneficial it is for our economy and businesses small and large.<br />
<br />PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com2tag:blogger.com,1999:blog-4455641987668883149.post-89470791446060479812011-07-12T16:08:00.001-04:002011-07-12T16:10:12.867-04:00Industry Thoughts | Private Equity and the Public Image<i>Wow. It's been a while since I've been here. Sorry for the delay, folks, it's been a hectic past few months, but rest assured, more thought pieces will be coming back to the blog!</i><br />
<i><br /></i><br />
<i>That being said...</i><br />
<i><br /></i><br />
So DealBook this afternoon brought in a new <a href="http://dealbook.nytimes.com/2011/07/12/a-flawed-picture-of-private-equity/">post</a> from Steve<span class="Apple-style-span" style="font-family: inherit;"> Klinsky (</span><span class="Apple-style-span" style="color: #333333; font-family: inherit;"><span class="Apple-style-span" style="line-height: 20px;">founder and CEO of </span></span><a href="http://www.newmountaincapital.com/index.php" style="color: #346f9a; font-family: inherit; line-height: 20px; text-decoration: none;">New Mountain Capital</a><span class="Apple-style-span" style="color: #333333; font-family: inherit;"><span class="Apple-style-span" style="line-height: 20px;"> and chairman of the Growth Capital Committee within the Private Equity Growth Capital Council) as a response to Deal Professor Steven Davidoff on how VC has a better public image than PE. Klinsky goes on to point out the total number of PE firms out there (1,800+) as well as his firm and others have reached out to the public in positive matters, from "social </span></span><span class="Apple-style-span" style="color: #333333;"><span class="Apple-style-span" style="line-height: 20px;">responsibility</span></span><span class="Apple-style-span" style="color: #333333; font-family: inherit;"><span class="Apple-style-span" style="line-height: 20px;"> dashboards" to working with the Environmental Defense Fund.</span></span><br />
<span class="Apple-style-span" style="color: #333333; line-height: 20px;"><br /></span><br />
<span class="Apple-style-span" style="color: #333333; line-height: 20px;">I've brought up the topic of PE and its lacking PR strategy before, and this situation is no different. Yes, there are some PE firms that have reached out through social media and other release to educate the public about how their firms (and the industry) are beneficial:</span><br />
<br />
<ul>
<li><span class="Apple-style-span" style="color: #333333; line-height: 20px;">ABS Capital Partners consistently releases information about their portfolio companies via Twitter</span></li>
<li><span class="Apple-style-span" style="color: #333333; line-height: 20px;">Blackstone now consistently puts outreach programs they do through the firm and their portfolio companies via Twitter </span></li>
<li><span class="Apple-style-span" style="color: #333333; line-height: 20px;">Many other firms post jobs within their portfolio companies via Facebook and Twitter, as well as reaching out through LinkedIn</span></li>
</ul>
<div>
<span class="Apple-style-span" style="color: #333333;"><span class="Apple-style-span" style="line-height: 20px;">This outreach is great, and it's a good start. But the private equity industry's PR strategy is dwarfed by that of the venture capital industry (and even more dwarfed by the banking industry). You can argue that VC firms and banks have lobbyists at their disposal, but that's not even the largest reason why people know more about VC-backed companies and banks. They've found more consumer-friendly ways to reach out and they've done it extremely often.</span></span></div>
<div>
<span class="Apple-style-span" style="color: #333333;"><span class="Apple-style-span" style="line-height: 20px;"><br /></span></span></div>
<div>
<span class="Apple-style-span" style="color: #333333;"><span class="Apple-style-span" style="line-height: 20px;">So how can PE step it up? I think the solution is relatively simple: many recognizable companies from Dave & Buster's and Betsey Johnson to J.Crew and Hooters are owned by PE firms, so why not educate the public on how the industry has made these well-known companies better? (Dave & Buster's is a great example as Wellspring took it from being a bankrupt company and gave it an extremely powerful second life.) After you start the education on recognizable firms, you move towards the more complex ones, like the heavy machinery, manufacturing, and labor-heavy sectors. Besides, being able to slowly teach Americans that the industry has created American jobs across all areas is a formidable feat to have.</span></span></div>
<div>
<span class="Apple-style-span" style="color: #333333;"><span class="Apple-style-span" style="line-height: 20px;"><br /></span></span></div>
<div>
<span class="Apple-style-span" style="color: #333333;"><span class="Apple-style-span" style="line-height: 20px;">We'll see what happens with Congress as the carried-interest tax can keeps getting kicked down the road as well as how the SEC registration rules work. But if PE wants to build a stronger public image, work with what everybody knows.</span></span></div>
PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com2Unknown location.37.09024 -95.71289111.6301275 -136.1425785 62.5503525 -55.2832035tag:blogger.com,1999:blog-4455641987668883149.post-2605060958991499912011-04-12T14:39:00.001-04:002011-04-12T14:40:24.708-04:00Industry Thoughts | The Future of Restaurants and Private Equity's Possible Involvement<span class="Apple-style-span" style="font-family: inherit;">Back in November, Dan Primack of Fortune penned a </span><a href="http://finance.fortune.cnn.com/2010/11/30/trimaran-should-answer-for-steakhouse-shutdowns/" style="font-family: inherit;">post</a><span class="Apple-style-span" style="font-family: inherit;"> about how private equity firms "<span class="Apple-style-span" style="line-height: 20px;">have a responsibility to company employees" while not only to their LPs. He </span></span><span class="Apple-style-span" style="line-height: 20px;">alluded</span><span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="line-height: 20px;"> to his Bugaboo Creek Steakhouse "BBQ chicken nachos night" (which looks <a href="http://www.foodiebytes.com/menu/ma/milford/bugaboo_creek_steak_house.html">delicious</a> by the way) where his digging led him to Trimaran Capital Partners's selling of the entire parent company (which also owned Charlie Brown's Steakhouse and The Office Bar & Grill, places I grew up with in New Jersey).</span></span><br />
<span class="Apple-style-span" style="line-height: 20px;">Today I saw updates in terms of all the companies:</span><br />
<br />
<ul><li><span class="Apple-style-span" style="line-height: 20px;">Praesidian Capital is </span><span class="Apple-style-span" style="line-height: 20px;"><a href="http://www.nj.com/business/index.ssf/2011/04/charlie_browns_nj_sold.html">buying</a></span><span class="Apple-style-span" style="line-height: 20px;"> Charlie Brown's for a paltry $9.5MM (Trimaran bought them for $150MM in 2005 from Castle Harlan). All of the 20 remaining stores are rumored to stay open.</span></li>
<li><span class="Apple-style-span" style="line-height: 20px;"></span><span class="Apple-style-span" style="line-height: 20px;">Bugaboo Creek got sold to an unknown buyer for $10.1MM in March 2011.</span></li>
<li><span class="Apple-style-span" style="line-height: 20px;"></span><span class="Apple-style-span" style="line-height: 20px;">The Office got sold to <a href="http://www.villapizza.com/">Villa Enterprises</a> (which runs 4 fast food joints) for $4.7MM in January 2011.</span></li>
</ul><br />
<span class="Apple-style-span" style="line-height: 20px;"></span><span class="Apple-style-span" style="line-height: 20px;">It's a fresh start for all 3 restaurant chains and a good sign. Specialty has been key for consumer-focused private equity acquisitions these years, and restaurants, if owners revitalize their product or brand portfolios (or if PE execs see a potential revitalization), this buying trend should continue.</span><br />
<span class="Apple-style-span" style="line-height: 20px;">It will be an interesting sector to watch.</span>PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0tag:blogger.com,1999:blog-4455641987668883149.post-938081789435180392011-04-01T16:21:00.000-04:002012-05-01T10:22:25.370-04:00Industry Thoughts | Private Equity and the Investment ThesisDan Primack of Fortune penned a quick <a href="http://finance.fortune.cnn.com/2011/04/01/private-equity-must-share-its-plans/">post</a> today wishing that private equity firms would give a little more detail about their overall investment thesis when they buy portfolio companies. Reporters care less about the seller than the buyer, Dan writes, so explain at the closing of the deal why a firm bought the company and what's the game plan while they still have journalists' attention.<br />
<br />
Yes, Dan, it would be nice for firms to be a little more specific. (It would also make MY job easier to determine deal flow for my work.) However, until there's more specific and targeted regulation on PE, you're not going to get as lucky and have PE firms be more welcoming in terms of sharing that information. Knowing firms I deal with every day, I'd be pretty surprised if they changed.<br />
<br />
Now, while I say that, I'm not being bitter towards private equity firms. It's more so that there's no reason to share that information about the investment thesis, as the only people who REALLY need to know are the LPs and lenders. Again, when regulation hits, we'll probably see some compromises.<br />
<br />
One other thing: I also think that because journalists in the private equity space have different sources, it's important to recognize their scoops. A good example is with HIG's Hooters of America deal: The Deal was able to uncover the mystery private equity firms that worked with Chanticleer (along with the purchase price), then Pitchbook was able to identify the Texas Wings buy that went along with the deal. It sucks sometimes that you have to go through 5-6 sources to get the entire story, but that's how the scoop world works.PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0tag:blogger.com,1999:blog-4455641987668883149.post-65743870234203424422011-03-21T17:05:00.000-04:002012-05-01T10:21:37.398-04:00Industry Thoughts | ACG And Lobbying, Part IV (A response to David's response)<span class="Apple-style-span" style="line-height: 19px;">After a lot of responses (including my own) over </span><span class="Apple-style-span" style="line-height: 19px;">his recent</span><span class="Apple-style-span" style="line-height: 19px;"> </span><span class="Apple-style-span" style="line-height: 19px;"><a href="http://www.pehub.com/99032/is-trying-to-show-that-pe-creates-jobs-a-wasted-effort/">article</a> in PEHub</span><span class="Apple-style-span" style="line-height: 19px;">, David Toll, the Editor-in-Charge at Buyouts, made a response of his own:</span><br />
<span class="Apple-style-span" style="line-height: 19px;"><span class="Apple-style-span" style="font-weight: bold; line-height: normal;"></span></span><br />
<div style="color: #333333; font-family: 'Lucida Grande', Verdana, Arial, sans-serif; font-size: 11px; font-weight: normal; line-height: 1.5em; margin-bottom: 10px; margin-left: 0px; margin-right: 5px; margin-top: 10px; text-transform: none;">
Thanks for joining the debate everyone, and all the thoughtful responses. I know that many portfolio companies grow, and sometimes rapidly, under PE ownership–we will be honoring one such company as a “Mid Market Deal of the Year” in about 45 minutes (via Twitter @Buyouts). As I noted in my column, I’ve also seen how effective promoting job-creation can be in lobbying Congress (by the NVCA and the Real Estate Roundtable). But I’m not convinced that, in general, the buyout strategy is about job creation–partly due to the borrowing imposed on my portfolio companies to pay for their acquisitions, partly due to the inefficiencies of many targets pre-acquisition (and the need to trim the fat), and partly because that’s what past research has shown. A PR strategy that centers on job growth arguably makes the industry an even bigger target for critics who feel they can prove buyout firms are about job cutbacks. All that said, the industry needs to do a better job of answering its critics and of getting a better shake on the Hill–I see that. One of my earlier columns had a headline that went something like this: “Is the industry going to accept SEC registration without a fight?” I meant it as a call to action. Perhaps it is a little unfair to criticize ACG for now acting. But I also don’t want to see the industry do anything that’s counterproductive.</div>
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<div style="line-height: normal; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
<span class="Apple-style-span" style="line-height: 19px;">I agree, David, that buyout firms do not have job creation as the primary motive behind their investments. I also am glad that your piece on SEC registration was a specific call to action; it's sad that only a few private equity firms were the only responders to the Dodd-Frank move while a lot of PE firms in general were whining about the upcoming regulation but not doing anything about it. </span></div>
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<span class="Apple-style-span" style="line-height: 19px;">That being said, it will be interesting to see how successful ACG's PR strategy about mid-market private equity is. There is no middle ground here: it is either going to do very well in convincing Congress that mid-market PE is the future or it's going to fall flat on its face. I guess we'll probably know in around 6 months or so.</span></div>
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<span class="Apple-style-span" style="line-height: 19px;">Good luck, ACG! You're going to need it.</span></div>
</div>PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0tag:blogger.com,1999:blog-4455641987668883149.post-22024624296200485402011-03-18T10:42:00.000-04:002011-03-18T10:42:28.672-04:00Industry Thoughts | ACG And Lobbying, Part IIIYesterday, David Toll, Editor-in-Charge at Buyouts, penned a <a href="http://www.pehub.com/99032/is-trying-to-show-that-pe-creates-jobs-a-wasted-effort/">piece</a> on how ACG is putting together a mid-market PR campaign on how mid-market private equity firms are contributing to job creation in the USA. The site (click <a href="http://www.middlemarketgrowth.org/">here</a>), in Toll's view, is a waste of time and that it's not worth the effort to worry about what he calls an "unwinnable" PR battle.<br />
<br />
Well, David, I absolutely disagree.<br />
<br />
I've written a <a href="http://thepereader.blogspot.com/2010/12/industry-thoughts-acg-and-lobbying.html">few</a> <a href="http://thepereader.blogspot.com/2011/01/industry-thoughts-acg-and-lobbying-part.html">posts</a> about why ACG should have a lobbying arm or PR campaign for private equity firms. PE firms themselves had to push back against the growing moves from Congress (most recently via firms fighting the $150MM under management SEC registration legislation), and now that ACG (who has 3,300, or 23.5%, of its 14,000 members from private equity) is making a formal PR push focusing on middle market firms, it's a bright sign.<br />
<br />
But what's important to recognize here is that something is better than nothing.<br />
<br />
I've argued in the past that because the industry's PR machine was almost non-existent, when Congress sets its sights on the industry through implementing regulatory reform, firms were going to scramble and find backup plans themselves. The public has no clue what private equity can actually bring to the table in terms of restructuring companies, job creation, and actually creating some sort of value.<br />
Hey, until the ACG's movement, the only type of PR going one was going to be <a href="http://thepereader.blogspot.com/2011/03/industry-thoughts-private-equity-goes.html">Lynn Tilton's reality show</a>. Do we really think that THAT'S going to leave a positive opinion on John Q. Public??<br />
<br />
I believe that middle market (and lower-middle-market) PE firms are going to be the face of the industry over the next 3-5 years. Here's why:<br />
<br />
<ol><li>The lower-mid-market guys are included in this SEC legislation mess as the threshold in terms of capital under management is about $200MM. Plus, most of the firms I talk with have at least $100-$150MM under capital! One of the exceptions is <a href="http://l2capital.net/">L2 Capital</a>, which was a spin-off from Milestone Partners, a firm that focuses heavily on lower-middle-market.</li>
<li>If a growing negative sentiment from the public grows, it will lead to a populist movement from Congress that will slam heavier regulatory reform on the industry. I'm not confident that the government will be able to grow small and medium business jobs in the short term, and because companies of those sizes have the highest necessity for job creation, you can have PE firms who specialize in those types of businesses to come in and fix them up.</li>
<li>With the credit markets opening up again, these mid-market firms are getting more access to capital. However, lower-mid-market and mid-market firms in general are known to be significantly more cautious in their investments, so you'll continue to see low-multiple acquisitions from them. </li>
<li>Mid-market firms majorly invest in companies in the US. They look to streamline operations and developing well-oiled machines. Besides, more and more firms are looking to talented 3rd parties (e.g., turnaround experts, consultants) to help them fix their portfolios. Why now? Because they have the capital to pay for it again.</li>
</ol><br />
The private equity PR battle can be won. It's just that any voice lobbying for PE never existed before, and that if there was any organization that needed to spearhead it, it's ACG. The middle market is the future for PE, and by doing nothing to support it and educate the public, PE would be in for a hailstorm.<br />
<br />
Again, something is better than nothing.PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0tag:blogger.com,1999:blog-4455641987668883149.post-70343680414464835852011-03-16T10:55:00.002-04:002011-03-16T11:00:58.609-04:00Industry Thoughts | Some More Thoughts On Private Equity's "Use It Or Lose It" Debacle<span class="Apple-style-span" style="font-family: inherit;">Last week I put up a <a href="http://thepereader.blogspot.com/2011/03/industry-thoughts-private-equity-dry.html">post</a> about Dan Primack's <a href="http://finance.fortune.cnn.com/2011/03/08/bain-agrees-big-risk-of-lousy-pe-deals-in-2011/">response</a> to the 2011 Bain Global Private Equity Report. I agreed with Dan that firms are facing pressure from LPs to spend the last of their funds, which would in turn fuel "bad deals." However, I felt that this trend would not be seen amongst all private equity firm sizes, notably some mid-market and lower-mid-market shops.</span><br />
<br />
<span class="Apple-style-span" style="font-family: inherit;"></span>Then today, courtesy of <span class="Apple-style-span" style="line-height: 14px;"><a href="http://twitter.com/smcalaine">Stephanie McAlaine</a>, Executive Director of </span>ACG Philadelphia, I read a <a href="http://news.medill.northwestern.edu/chicago/news.aspx?id=183195">piece</a> about how the public market turmoil could be a boon for the private equity industry. I agreed with the general opinion; the industry has diversified itself so well that it's becoming a safer play to look at fund-of-funds investments, and the fact that it will find ways to fight any sort of regulation (unless FINRA comes knocking, as David Snow pointed out in a <a href="http://www.privcap.com/snowsnotes/2011/03/the-examiner-cometh/">Privcap post</a>) will help it stay safely diversified.<br />
<br />
<span class="Apple-style-span" style="font-family: inherit;"></span>However, one key statistic came to my attention:<br />
<br />
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="color: blue;"><i><span class="Apple-style-span" style="font-family: Georgia, 'Times Roman', 'Times New Roman', serif; font-size: 14px; line-height: 21px;">According to Coller Capital Ltd., which tracks the industry, 60 percent of private equity investors, known as Limited Partners, or LPs, plan to increase their rate of new private equity commitments in 2011, and 34 percent intend to increase their target allocation to private equity, compared with 19 percent a year ago.</span><span class="Apple-style-span" style="font-family: Georgia, 'Times Roman', 'Times New Roman', serif; font-size: 14px; line-height: 21px;"> </span></i></span></span><br />
<br />
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="color: blue;"><i><span class="Apple-style-span" style="font-family: Georgia, 'Times Roman', 'Times New Roman', serif; font-size: 14px; line-height: 21px;"></span></i></span></span>Now I know Dan's right that there still is pressure from LPs that private equity firms are facing to use up the cash, but now I'm more convinced (thanks to Coller) that LPs are going to end up being ok with transferring that remaining capital to the next fund/commitment contract. While I'd like to get more details from Coller about the statistic (is this for the overall industry, does it differ significantly when look at PE firms by size, etc.), it's a promising piece of information.<br />
<br />
That, plus the fact that my contacts and clients haven't taken a break from deal-making after a VERY busy Q4 2010 (and therefore keeping me busy) helps.<br />
<span class="Apple-style-span" style="font-family: inherit;"><br />
</span>PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0tag:blogger.com,1999:blog-4455641987668883149.post-34827579696981496332011-03-09T18:10:00.002-05:002011-03-25T10:27:55.476-04:00Industry Thoughts | Revisiting Private Equity, Public Relations,and Dividend RecapsWhile catching up on some reading, I perused Dan Primack's recent <a href="http://finance.fortune.cnn.com/2011/03/09/why-private-equity-has-a-tough-time-finding-love/">piece</a> on dividend recaps and how private equity firms should be frank about dividend recapitalizations. Dan mentions that at the recent Columbia Business School private equity conference, many executives were complaining that the industry has gotten bad press (see: "strip and flip") and hasn't done much at all in terms of PR. However, many firms continue to perform the ever-controversial dividend recap (create a term loan designed to pay a dividend to the investor or investors) and still state that they're adding value to their portfolio companies.<br />
<br />
First off, regarding the PR effort, I have <a href="http://thepereader.blogspot.com/2010/11/welcome-how-it-all-started-and-making.html">written</a> <a href="http://thepereader.blogspot.com/2010/12/industry-thoughts-acg-and-lobbying.html">many</a> <a href="http://thepereader.blogspot.com/2011/01/industry-thoughts-acg-and-lobbying-part.html">posts</a> as messages to the <a href="http://www.pegcc.org/">PEGCC</a> and <a href="http://www.acg.org/">ACG</a> to help out the private equity industry; the ball is in their courts to help generate a good PR effort and show the general public (in some way) that private equity firms <i>are</i> helping portfolio companies and the American industries become better. However, there's been a limited push from both organizations (I can understand ACG's reasoning as I wrote <a href="http://thepereader.blogspot.com/2011/01/industry-thoughts-acg-and-lobbying-part.html">here</a>, but the PEGCC doesn't get let off the hook). Much more CAN be done and the clock is ticking until Congress moves its target from hedge funds and banks to private equity. The upcoming HCA IPO is probably going to quicken the countdown clock.<br />
<br />
In terms of dividend recaps, I absolutely agree with Dan. You're NOT adding value by enforcing these loans; in some drastic cases, I've seen private equity firms take a too drastic approach, giving the portfolio company no choice but to file for bankruptcy.<br />
Now while I am not a fan of the strategy, I understand that it is necessary to execute it at times; LPs may be wanting money back, the company may be on the right track to success that they are able to pay up the investors, or the firms want to apply pressure on their portfolio company to improve their performance.<br />
<br />
However, like Dan said, private equity firms need to admit why they're executing a dividend recap. Admit your mistakes. Explain how it fits into the main plan for the company you're working on. As frustrating as it may be to admit in the short-term, firms will win support from consumers who will understand that there is a true and heavily successful growth strategy plan in the works and that there's a good chance that the plan will live up to its standards.<br />
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Be smart, PE firms. Stop beating around the bush with value-added fluff.PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0tag:blogger.com,1999:blog-4455641987668883149.post-6586144021103842002011-03-08T16:54:00.001-05:002011-03-08T16:56:35.409-05:00Industry Thoughts | Private Equity, Dry Powder, and "Bad Deals"Dan Primack of Fortune, a man worried about the results of 2011 private equity deal flow, posted this <a href="http://finance.fortune.cnn.com/2011/03/08/bain-agrees-big-risk-of-lousy-pe-deals-in-2011/">article</a> today after reading Bain & Company's annual Global Private Equity Report (which was published today). The firm agrees with him in that GPs holding a significant amount of dry powder with an expiration date on it (courtesy of the LPs) feel pressured to invest that capital. This "use it or lose it" feeling is definitely there, and I agree with Dan that it's going to affect 2011 PE deal flow.<br />
<br />
But what I think is important to recognize here is if the size of private equity firms matters. For example, many lower mid-market firms I met during the end of 2010 and the beginning of 2011 were being extremely cautious in terms of finding the <i>perfect</i> deal. However, that cautiousness I've seen amongst lower mid-market firms is due to many deals dropping dead in the water as they were working out the terms. That circumspection they are feeling is going to continue along the year, but coming back to the size issue, LPs may not favor firms because of their investment criteria in terms of size and apply the same amount of pressure to everyone.<br />
<br />
Rich Lawson of Huntsman Gay Global Capital also raises a good point <a href="http://twitter.com/Rich_Lawson/status/45237670380699648">here</a>: debut funds have it easy, but you could potentially see more growing. Another thing that could happen is that GPs could convince LPs to move that expiring dry powder into new funds. By rolling over the capital into the next fund, you get new terms and the approaching expiration worries off deal teams' backs.<br />
<br />
2011 private equity activity is under a very large microscope; if the year's deal flow turns out to be better than expected (and so far it's looking ok), 2012 deal flow is going to exponentially increase. If not, I think the industry will be in a logjam for at least another year.PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com2tag:blogger.com,1999:blog-4455641987668883149.post-19381681423621716452011-03-02T14:44:00.002-05:002011-03-02T14:48:02.761-05:00Not Private Equity, But Still Important | Quick iPad 2 ThoughtsYes, this post isn't related to private equity, but after reading the relatively underwhelming iPad 2 release today, I had a few thoughts that I wanted to share:<br />
<br />
<ol><li><b>Weight Matters:</b> It's thinner than an iPhone 4. Pretty awesome. But it still weighs more than 1 lb. As a current first-gen iPad owner, trust me; it makes a difference.</li>
<li><b>Incase Must Be Angry:</b> The new <a href="http://www.apple.com/ipad/smart-cover/">Smart Cover</a> designed for the iPad is nice and all, but the folding design is exactly like a case that Apple accessory maker Incase <a href="http://www.goincase.com/products/detail/convertible-magazine-jacket-cl57779">made</a> for the first-gen iPad. By the way, Incase is now <a href="http://www.spcap.com/consumer-products-portfolio/index.php?category=Specialty+Apparel+%26+Accessories&portfolio=Incase*">backed</a> by Swander Pace Capital, a private equity firm (smart buy for them). </li>
<li><b>It's All About the Accessories:</b> I currently have the first-gen iPad (thank you ACG CT!) and was more excited to see the new <a href="http://www.apple.com/ios/">iOS upgrade</a> and <a href="http://www.apple.com/ipad/features/mirroring.html">HDMI adapter</a>. ANY app or website can share video and audio to an Apple TV with the new AirPlay update on iOS 4.3, and full mirroring is available with the HDMI adapter. I can see that option being BIG for classrooms.</li>
<li><b>Cheaper First-Gen iPads:</b> Don't care about the hardware but excited about the software? Apple's online store is selling new and refurbished (aka basically new, Apple cleans them up really well) first-gen iPads starting at $350. Click <a href="http://store.apple.com/us/browse/home/specialdeals?mco=MjEzNTIzNzU">here</a>.</li>
</ol><div>That all being said, I'm happy with my first-gen iPad. I think Apple is slowly realizing that it's running out of innovation idea regarding hardware and is going to start focusing on software. </div><div>Moreover, one company was like Apple in its heyday and after a few products where the hardware didn't make sense, that same company focused on making its strongest products better software and specific components-wise.</div><div><br />
</div><div>That company is Sony.<br />
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</div>PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0tag:blogger.com,1999:blog-4455641987668883149.post-53317871283873062512011-03-01T16:01:00.001-05:002011-03-01T16:03:47.317-05:00Industry Thoughts | Private Equity Goes Into Reality TV, Thanks to Lynn TiltonTalk about an interesting story for private equity today: New York Magazine announced that TV network Sundance is <a href="http://nymag.com/daily/intel/2011/03/distress_diva_lynn_tilton_gets.html">launching a "nonfiction" show</a> about Patriarch Partners CEO <a href="http://www.patriarchpartners.com/lynntilton">Lynn Tilton</a>. The show will be called <i>The Diva of Distressed.</i><br />
<br />
Known for her powerfully blonde hair, 6-inch stilettos, and tight-fitting clothing, Lynn is also a tough and demanding head of the distressed-focused private equity firm she named after her father. (More background info about her, including her hilarious "I only strip and flip men" comment, is in this well-written <a href="http://online.wsj.com/article/SB10001424052748704055204576068253540689070.html">WSJ piece</a>.)<br />
<br />
After watching the clip in the link, I realize what Lynn's trying to do, and it's honorable. Private equity firms haven't tried any successful way to show the general public that they are helping the economy by acquiring portfolio companies. If anything, this is a good start for a helpful PR movement for the industry.<br />
Sadly, because of all the rotten programs that fall under the "reality TV" category, I feel that people will initially judge the show more on Lynn's looks versus what she's actually doing with the companies she now owns and is working on.<br />
<br />
Still, it's a good start. Best of luck, Lynn! You can follow her on Twitter <a href="http://twitter.com/lynntilton">here</a>.PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0tag:blogger.com,1999:blog-4455641987668883149.post-1808253452237211302011-02-28T13:15:00.001-05:002013-05-22T14:23:04.421-04:00Industry Thoughts | Private Equity and the Oscars<div dir="ltr" style="text-align: left;" trbidi="on">
What a night for the Oscars. James Franco acts like, well, James Franco, Anne Hathaway continues to show why she's awesome and extremely gorgeous, and <i>Inception</i> didn't get Best Original Screenplay (though hats off to <i>The King's Speech</i> for winning it). While watching the show (and switching between it and the awesome <a href="http://sports.espn.go.com/nba/recap?gameId=310227014">Knicks-Heat</a> game), I realized that, like how I mentioned in my <a href="http://thepereader.blogspot.com/2011/02/industry-thoughts-private-equity-and.html">Fashion Week post</a>, private equity firms have significant stakes in film studios!<br />
I thought I'd share a few of them, with the help of Pitchbook:<br />
<ul>
<li>MGM (through Spyglass Entertainment/Cerberus Capital Management)</li>
<li>Miramax (through Colony Capital among other firms)</li>
<li>Spyglass Entertainment (through Cerberus Capital Management)</li>
<li>Legendary Pictures (through ABRY Partners, Ridgemont Equity Partners, Falcon Investment Group, and a few others)</li>
<li>Village Roadshow Pictures (through Tailwind Capital, among other firms)</li>
<li>RealD (formerly through Shamrock Capital) - great piece from WSJ PE Beat <a href="http://blogs.wsj.com/privateequity/2010/12/02/for-3d-technology-co-an-angry-nicolas-cage-can-make-investors-happy">here</a></li>
</ul>
<div>
It's important to note that you'll see private equity firms put stakes into stronger film production studios in general; MGM, Miramax, Spyglass, Legendary, and Village Roadshow all have strong films within their portfolios. I haven't seen PE interested more in the independent film studios, but it's always good to keep an eye there.</div>
<div>
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Let's end with a hat tip to <a href="http://www.youtube.com/watch?v=wBF-0j1IPXw">Kirk Douglas</a> in light of his amazing appearance at yesterday's Oscars.</div>
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PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0tag:blogger.com,1999:blog-4455641987668883149.post-30600204853379118092011-02-17T15:15:00.003-05:002011-02-17T15:30:40.144-05:00Industry Thoughts | Private Equity and Fashion WeekYikes, sorry for the delay in posts, guys. With our clients keeping us ridiculously busy coupled with lots of deal flow, it's been tough to get a chance to put in a post. Luckily, the wonderful week of color, style, and design known as Fashion Week came to New York, but it didn't slow down deals either.<br />
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More importantly, during Fashion Week, two fashion houses were acquired by PE firms: <a href="http://www.suncappart.com/">Sun Capital Partners</a> (through <a href="http://www.kellwood.com/home.asp">Kellwood Co.</a>) acquired Rebecca Taylor, and <a href="http://www.castaneapartners.com/">Castanea Partners</a> acquired Donald J. Pliner. It's no surprise which firms ended up buying the storied houses; Sun Capital has a strong consumer division and Castanea happens to own a few other recognizable fashion <a href="http://www.castaneapartners.com/portfolio.php">labels</a>, including Urban Decay, Ippolita, and Betsey Johnson.<br />
Also, take a look at the WSJ's blog Private Equity Beat on a post-deal <a href="http://blogs.wsj.com/privateequity/2011/02/17/castanea-says-deal-for-shoe-designer-donald-j-pliner-has-%E2%80%9Ca-recipe-for-success%E2%80%9D/">interview</a> with Castanea partner Troy Stanfield on Donald J. Pliner.<br />
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Fashion and luxury apparel are popular sectors with PE. Margins are very high, brand reputation is getting stronger, and it's not difficult to grow a label if you have the right team behind the brand. Many fashion labels have been PE-owned before, including:<br />
<ul><li>Stuart Weitzman (Irving Place Capital at one point)</li>
<li>Jimmy Choo (TowerBrook Capital Partners)</li>
<li>Harry Winston (Fenway Partners at one point)</li>
<li>Rafaella (Cerberus at one point)</li>
<li>J. Mendel (The Gores Group)</li>
</ul><div>It's always exciting to me when a recognizable consumer goods company is acquired by a private equity firm, as brand strength and reputation are powerful keys to a company's growth. It'll be interesting to see if more fashion houses are on the way to going to buyout shops.</div>PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0New York, NY, USA40.7143528 -74.005973140.4541228 -74.47289210000001 40.9745828 -73.5390541tag:blogger.com,1999:blog-4455641987668883149.post-14891172701146880042011-02-04T12:05:00.003-05:002011-02-04T12:36:51.900-05:00Industry Thoughts | The PEGCC's Report On Buyout Activity...And Why I'm WorriedThe PEGCC (Private Equity Growth Capital Council) released their 2010 buyout activity report today, and the title says it all: <b>Buyout Activity Returns to 2008 Levels</b>.<br />
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This is scary.<br />
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I remember at the ACT CT PE Expo late last year that multiples for many deals were going between 9x and 12x, scaring away many of the mid-market private equity firms. Did firms forget what happened a few years ago? I'm hoping that the leverage ratios that buyout shops are using involve a significantly more amount of equity, because this data will not help PE, both with regards to setting the industry up for another dip down as well as how the industry looks in the eyes of Congress.<br />
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The link to the article is <a href="http://www.privateequityinternational.com/article.aspx?article=59405">here</a> (get a free subscription to read it), but here are the key passages below:<br />
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<div><span class="Apple-style-span" style="color: #666666; font-family: Verdana, sans-serif;"><i>Private equity-based buyout volume for all of 2010 reached $221 billion, according to the report, the highest figure since 2008. The 96 private equity-backed initial public offerings that took place over the course of the year raised over $35 billion globally, up from 32 IPOs that raised $12.7 billion in 2009, the PEGCC said. Exits in the US during 2010 totaled in excess of $110 billion, more than double the value of exits in 2009.</i></span></div><div><span class="Apple-style-span" style="color: #666666; font-family: Verdana, sans-serif;"><i><br />
</i></span></div><div></div><div><span class="Apple-style-span" style="color: #666666; font-family: Verdana, sans-serif;"><i>Total fundraising in 2010 reached roughly $104.4 billion, compared to $100.3 billion in 2009 and $99.8 billion in 2004. As of January 2010, buyout dry powder stood at an estimated $446 billion globally.</i></span></div><div><span class="Apple-style-span" style="color: #666666; font-family: Verdana, sans-serif;"><i><br />
</i></span></div><div><span class="Apple-style-span" style="color: #666666; font-family: Verdana, sans-serif;"><i>The PEGCC’s index measures global private equity activity based on total direct investment, buyout transaction volume, fundraising and the dollar value of private equity exits. The index reaches 100 when all four components are at their 10-year moving average. As of the end of 2010, the index stood at 115.3, its highest level since the fourth quarter of 2007.</i></span><br />
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Let me know what you guys think in the comments!<br />
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</div>PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0New York, NY, USA40.7143528 -74.005973140.4541228 -74.47289210000001 40.9745828 -73.5390541tag:blogger.com,1999:blog-4455641987668883149.post-30647025796061993402011-01-27T16:47:00.000-05:002011-01-27T16:47:40.940-05:00Industry Thoughts | ACG And Lobbying, Part IIBack in December, I wrote a <a href="http://thepereader.blogspot.com/2010/12/industry-thoughts-acg-and-lobbying.html">post</a> (which also got on <a href="http://finance.fortune.cnn.com/2010/12/29/pre-marketing-12-29-10/">The Term Sheet</a>) curiously questioning why <a href="http://www.acg.org/">ACG</a> (the Association for Corporate Growth) does not have a lobbying arm within the organization. I went to yesterday's ACG NY Healthcare Conference and got to meet with some heads. I asked about the lobbying movement and I got these answers:<br />
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<ul><li>The lobbying movement will strictly be informational; the organization voted to not make a more aggressive move but to continue sharing information about private equity industries and how PE has been beneficial through job creation, production efficiency, etc.</li>
<li>The reason why there also hasn't been an aggressive move is because members of ACG aren't only execs from private equity firms. You have C-level executives, service providers, and people from other random areas, so you can't entirely say that ACG can solely lobby for private equity.</li>
<li>There also has been a movement within ACG to its members to connect with Congress; members should be contacting Senators and Representatives to give them a lesson in how private equity has been helping the state. In other words, there are companies that have key facilities in the represented states that are a) partly or majority owned by private equity firms and b) have brought a significant number of jobs to the state itself.</li>
</ul><div>It was a good answer from the execs I talked with. I hope that the "talk to your Senator" movement gets stronger because, well, all we have going on now is some mid-market PE execs trying to <a href="http://www.pehub.com/93686/mid-market-firms-rally-against-registration/">fight the SEC registration requirement</a> in new legislation.</div><div>Good luck, ACG!</div>PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0tag:blogger.com,1999:blog-4455641987668883149.post-2201079194422609172011-01-26T13:45:00.001-05:002011-01-26T16:03:56.936-05:00Industry Thoughts | The Hooters Story<i>UPDATE: Dan Primack wrote the article about Wellspring's bid for Hooters of America. The link has been added below.</i><br />
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One of the great things about consumer goods-focused private equity deals is that many recognizable companies and brands get involved. The latest one is with the famous beer, wings, and attractive servers chain Hooters of America (HOA).<br />
To break it down, Wellspring Capital Management had made a bid for the chain last year, but the chain was then sued by one of its franchisees, a South Africa-based firm named Chanticleer Holdings, for violating the right of first refusal deal it had with a 2006 loan provided to HOA. Now, with 2 private equity firms as co-investors (KarpReilly and HIG Capital, as I found out <a href="http://pipeline.thedeal.com/tdd/ViewArticle.dl?id=10005525145">yesterday</a> thanks to The Deal Pipeline), Chanticleer made a $250MM bid for HOA, and Wellspring is suing for breach of contract.<br />
PEHub has covered the deal <a href="http://www.pehub.com/93999/scoop-whose-hooters-higs/">here</a>, and Dan Primack has covered it <a href="http://finance.fortune.cnn.com/2011/01/26/whos-really-buying-hooters/">here</a>. Here are my thoughts:<br />
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<ul><li>I'm not surprised that HIG Capital is involved here. They aren't slowing down in terms of deals from 2010. Continue keeping an eye on them, as the Miami-based firm is slowly expanding too.</li>
<li>I'm surprised that (according to Dan) HIG did the deal through its New York affiliate Bayside Capital. I wonder if their New York office was involved at all...(I know a few of the execs there)</li>
<li>Dan mentioned that Hooter's is supposed to make over $1 billion in revenue while Chanticleer has a market cap of only $7MM. <s>I believe PEHub or the WSJ PE Beat</s> Dan <a href="http://finance.fortune.cnn.com/2010/11/23/has-hooters-found-its-wingman/">wrote</a> about the initial deal by Wellspring a few months ago, and they mentioned that many of the chains now are run by a bunch of different franchisees. By buying HOA, HIG/KR/Chanticleer is probably only getting a few chains and will have to deal with those franchisees to get more.</li>
</ul>Regarding that last point, I wouldn't be surprised if the consortium works to get as many chains as possible. It just comes to show that private equity firms aren't afraid of some stereotypes.<br />
After all, the great Chris Rock said in his song <i>No Sex in the Champagne Room</i>: "Nobody goes to Hooters for the wings..."PE_Feedshttp://www.blogger.com/profile/02768491229654253596noreply@blogger.com0